All about pricing

Departments - Commodities Plastics

A new daily spot price assessment launched for rPET food-grade pellets, and HDPE prices continue to rise.

December 2, 2020

Pricing for natural high-density polyethylene (HDPE) bottle bales has been on the upswing since August. Colored HDPE bottle bales also have ticked upward in price in recent months, more than doubling.

A contact at a reprocessor based on the West Coast that produces nonfood-grade pellets says postconsumer generation of HDPE bottles still seems softer than normal. “We are having trouble getting natural [bales],” says Ajit Perera, vice president of postconsumer operations at Talco Plastics Inc., Corona, California. “There is high demand for color [bales] as well.”

He says colored HDPE bottle bales have doubled in price in the last 30 days as of mid-November. This increase mirrors the increase in virgin HDPE pricing, Perera says.

“Ultimately, the accountant might make that final call. In most cases, postconsumer natural HDPE is twice as much as virgin.” – Ajit Perera of Talco Plastics Inc., Corona, California, says of recycled content use

Natural HDPE also has increased substantially since September, though only modestly from October. At roughly 60 cents per pound, the price of natural HDPE bottles is rivaling that of aluminum used beverage cans, he adds.

Perera says he expects prices for natural and colored HDPE bottle bales to remain high through the end of the year. “The question is whether it will move further up.”

He says Talco’s reprocessed HDPE is in demand, though the company does not chase the spot market.

Trucking issues have hampered material movement. Pricing in some lanes has increased by more than 100 percent, Perera says. “Almost all lanes have increased from June and July.”

When asked how the trucking situation has affected the company’s margins, he says, “We have gotten burned so many times, we are careful how we offer material.”

Perera says he believes brand owners will continue to demand postconsumer resin because they have made commitments to incorporate recycled content. “Ultimately, the accountant might make that final call,” he continues. “In most cases, postconsumer natural HDPE is twice as much as virgin.”

Also in the area of pricing, S&P Global Platts, headquartered in London, has announced that it has expanded its pricing assessments in the U.S. to encompass the full supply chain in the Los Angeles market.

In mid-November, the company launched a daily spot price assessment for recycled polyethylene terephthalate (rPET) food-grade pellets, which joined its price assessments for PET bottle bales and rPET flakes.

Ben Brooks, global lead, recycled plastics, S&P Global Platts, says the company chose L.A. to launch its rPET pellet price assessment because that is where it sees market liquidity. “New legislation also fits in,” he says, referencing the state’s recently passed legislation that will require PET beverage bottles sold in the state to contain 50 percent recycled content by 2030.

In the first phase of California’s law, PET bottles must incorporate 15 percent recycled content in 2022. “We expect demand and activity to increase in 2021,” Brooks says. “They need access to pricing data ahead of the legislation to make sure they can meet it.”

Despite this and similar recycled-content requirements, Rob Stier, a Houston-based petrochemical analyst with S&P Global Platts, says recyled plastics will continue to be challenged by “oversupplied petrochemical markets across the board—regardless of resin.”